Untangling Trade and Technology: Evidence from Local Labor Markets

Income Distribution, May 2015

The authors jux­ta­pose the effects of trade and tech­nol­ogy on employ­ment in U.S. local labor mar­kets between 1990 and 2007. Labor mar­kets whose ini­tial indus­try com­po­si­tion exposes them to ris­ing Chinese import com­pe­ti­tion expe­ri­ence sig­nif­i­cant falls in employ­ment, par­tic­u­larly in man­u­fac­tur­ing and among non-college work­ers. Labor mar­kets sus­cep­ti­ble to com­put­er­i­za­tion due to spe­cial­iza­tion in rou­tine task-intensive activ­i­ties expe­ri­ence sig­nif­i­cant occu­pa­tional polar­iza­tion within man­u­fac­tur­ing and non­man­u­fac­tur­ing but no net employ­ment decline. Trade impacts rise in the 2000s as imports accel­er­ate, while the effect of tech­nol­ogy appears to shift from automa­tion of pro­duc­tion activ­i­ties in man­u­fac­tur­ing towards com­put­er­i­za­tion of information-processing tasks in non-manufacturing.